“I am informed by IBRC that this information is not readily available at this time and the compilation of this information is likely to delay completion of the Mercer Remuneration Report which is a Government priority” Minister for Finance Michael Noonan with his recent template response to questions about banking pay and pensions.
The outrage towards pay and pensions in the banking sector, which was reignited last October 2012 when the Fianna Fail finance spokesperson Michael McGrath asked the AIB CEO, David Duffy, a seemingly benign set of questions at an Oireachtas committee hearing, has receded in the last month as Budget 2013 woes and then the Christmas and New Year holidays interceded. The politicians are still on a break, and won’t return to the Dail until 16th January, but one of the first items on the agenda should be banking pay and pensions.
Last year, Minister for Finance Michael Noonan eventually refused to answer parliamentary questions on banking pay and pensions by saying a report was being produced and researching the responses to questions would only delay its completion, this despite the fact that we are paying €120,000 to a third party, Mercer to produce the report.
Minister Noonan was coy about the terms of reference* but we understand that Mercer was engaged in June 2012, so we’ve been waiting six months for whatever report will be produced – at least 180 days, access to the Department of Finance and €120,000, the report had better be outstanding. An Taoiseach Enda Kenny indicated the report would be published before the Budget 2013 announcement but Minister Noonan has kept to his line that it would be delivered “by the end of the year”. That was last week.
Minister Noonan has claimed he is “powerless” to intervene at banks, which he owns, to regulate pay and pensions. He was told to “get lost” by IBRC when, last April 2012, he requested staff earning more than €200,000 to take a 15% cut. He has recently approved a €500,000-plus salary for IBRC’s chief risk officer and then said he wouldn’t tell us how much the equivalent function was being paid at NAMA. The €1.1bn pension fund top-up at AIB in August 2012 has not gone away, and just before Christmas, Independent TD Stephen Donnelly was cut short at an Oireachtas hearing when he tried to probe why we bailed out the AIB pension fund, when that bank was hopelessly insolvent and have stood by whilst other pension funds have run into deficits.
The view on here is that the Mercer report is a diversion designed to kick the issue of banking pay and pensions into the long grass. Minister Noonan knows that at a senior level, there is wide variation on pay levels, that NAMA staff are carrying out the same functions with the same complexity as IBRC, and yet senior pay levels at NAMA are 25%-plus less than those at IBRC.
Next week, when the politicians return from the holliers, the Mercer report should be firmly on the agenda.
*There was a raft of questioning on the Mercer report in November 2012. This is a sample.
Deputy Pearse Doherty: To ask the Minister for Finance in respect of the appointment of Mercer in June 2012 to examine pay levels across banking institutions, if he will provide the terms of reference attaching to the appointment; the timescales for the production of research or reports; if such timescales form part of the contract with Mercer, the estimated fees payable to Mercer and a copy of any associated tender document, and an overview of the cost and description of any additional resources provided by the him or his Department to Mercer to facilitate the completion of the work..
Deputy Pearse Doherty: To ask the Minister for Finance in respect of the appointment of Mercer in June 2012 to examine pay levels across banking institutions, if salaries at the Central Bank of Ireland and National Asset Management Agency were included in the scope of the Mercer work when that company was appointed in June 2012.
Minister for Finance, Michael Noonan: I propose to answer questions 225 and 226 together. The Deputy should note that I have already provided the information he seeks when responding to his parliamentary questions of 15th November 2012 (Ref No. 50509/12) & 20th November 2012 (Ref No. 51025/12).
For his convenience I am including the information below.
“The Deputies will be aware that my Department is presently engaged in a Review of Remuneration Practices and Frameworks at the covered institutions. I have recently engaged, as I informed the Opposition Spokespersons on Finance, the services of Mercer (Ireland) Limited following a limited competitive tender competition to assist my Department in bringing this exercise to a conclusion. The estimated cost of the review, at this stage, is approximately €120,000.
The object of the review is to thoroughly review all remuneration practices at the covered institutions with the object of simplifying remuneration and compensation structures, discouraging excessive risk-taking and to better align pay and reward to long term value creation. Present Government policy on remuneration dictates that no employee, at the covered institutions may receive more than €500,000 (excluding pension contributions) per annum and remains in force.
Numerous engagements by my officials and Mercer have taken place since the awarding of the contract. I am expecting the consultant’s report to be delivered by year end whereupon consultations with the various stakeholders will commence.
As I have said previously, I fully recognise that there is a real public interest in the levels of remuneration at the covered institutions and have committed to placing the details underpinning the review into the public domain”.
In relation to his further question on additional resources, no such resources have been provided by me or my Department to Mercer to facilitate the completion of the work.
As the review involves the Covered Institutions the Central Bank of Ireland & the National Asset Management Agency are not included in its remit.